Is Ongoing Goal Progress Reporting Dead in the Trust Space? It’s Not Until the Investor Is.

In the not-so-distant past, the subject of Goal-Based Reporting (GBR) as a valuable tool for managing the journey of investors was a hot topic. It seemed as though this was the conversation individual investors really wanted to have while they were accumulating and spending their wealth. They’ve asked advisors to answer the questions “Will I have the money I need?” and “Will it be enough?”

Very few institutions we’ve spoken with have actually pushed through to implementation. Why is this?

  • Being at or above a benchmark is largely an institutional reporting construct and matters less to an individual. Based on the investor’s objectives, it’s not the game they’re in or the information they care about.
  • Some advisors feel that this needs to be a holistic conversation and outside assets are the problem. The solutions are plentiful in that space and not a barrier.
  • Financial planning systems are being widely implemented. Many advisory firms see loads of potential to gain fans by having this conversation. While the advisors agree that investors should have plans, the data shows that less than 40% of trust clients actually have one. More importantly, it is challenging for many firms to keep them evergreen and updated with the client’s progress – which may be the real culprit.

Advisors likely have every intention of creating a full financial plan for each and every investor. However, that requires additional resources and is labor intensive. Until firms commit to creating a plan to keep their investors on target (within a range), the conversion to this methodology will languish.

The reality for many investors is that less will do. Firms can take an intermediate step to get on the same page as the investor by plugging some basic financial goals into a simplified goal system, such as First Rate’s Goal Based Reporting tool, and incorporating a progress-to-goal report. This is a great first step to having a more meaningful conversation. The tool has less than 15 inputs and the advisor can create scenarios with different assumptions within a matter of minutes.

At this point, there are no silver bullets; however, it is important that we don’t give up.  We are stewards of financial dreams and want to help investors sleep at night.  Everyone I know in this business takes that seriously, so let’s keep working. If you disagree with me or have additional insights, I would appreciate hearing about it!

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